The impact of the current economic crisis is widespread. It has not only affected businesses, but also consumers, irrespective of urban or rural regions. A survey conducted by IMRB among 2,440 households across urban and rural areas has revealed that consumers have cut expenditure on high-end products and entertainment in order to survive in the current crisis. The survey shows that consumers have a negative outlook on the future of the economy.
However, most consumers feel that there is no change in their financial health so far. Though the current picture is gloomy, there is a ray of hope. But as things are expected to improve in future, the degree of improvement may be lesser.
Overall, a negative sentiment towards the economy was observed across urban and rural India. Almost 55% of the total respondents were pessimistic about the current economic conditions. Among consumers with positive outlook, urban India believes that sentiments in urban regions would take longer to improve.
Many respondents in the eastern and western parts felt that the current situation was worse than the previous year. In each of the regions, nearly 36% of the total respondents expressed concern over the current economic scenario. However, the sentiments were not that bad in the southern part of the country, where merely 8% of total respondents had negative sentiments.
Respondents were more optimistic about the future economic outlook. All regions except the west see improvement in the economic situation in future. A strong presence of financial markets in the western region seems to have influenced the overall sentiments of the region.
Almost 51% of the total respondents felt that current job scenario was bad. The degree of negativity is similar across the urban and rural India. Consumers in the east and the west were most negative about the current job outlook. In future, the job market is unlikely to revive as fast as the economy, feel consumers. West is most pessimistic about the future. While other regions are anticipating an improvement in the job market, the degree of improvement is expected to be low.
Despite the gloomy economic situation, consumers have so far managed to protect their financial health. Almost 78% of the respondents either feel no change or improvement in their financial health. The sentiments are better among the urban respondents as compared with their rural counterparts. Contrary to the national scenario, consumers in the western India have negative sentiments about their personal financial health. However, the future outlook in this region is expected to improve, along with the other regions.
Consumers seem to have adopted a cautious outlook on their spending. Expenditure on big-ticket items such as buying new home or vehicle, and on entertainment, is down. On the other hand, spending on essential items, such as FMCG products, apparel and telecom, has actually improved significantly. In future, consumers are unwilling to increase their expenses of high end products even though the economic situation is likely to improve.
Though the wholesale price index based inflation in India has ebbed over the past few months, consumers still feel the pinch of inflation. It is probably because price indices of food grains, vegetables and other food articles are still higher by 8-10 % from the previous year’s levels. Since consumers are expecting inflation to worsen further, this raises concern over the future consumption demand.
In conclusion essential commodities are in demand as usual by consumers. Anything whose buying can be deferred is not looked at because the increase in prices of essential commodities offset any spare money for extra purchases.